“Privatization receipts should be utilized in a balanced manner, to reduce debt and clear unpaid bills,” says the IMF
TIRANA, Nov. 8 – The Albanian government owes the private sector in unpaid bills over Euro 200 million, according to economy experts and business representatives. The majority of unpaid bills, at an estimated Euro 120 million, belong to the crisis-hit construction sector, followed by Euro 50 million to service companies and 12 million euros in unpaid bills to hydropower plants concessi-onaries for electricity purchases. Businesses also claim dozens of millions of Euros in VAT refunds.
Nikolin Jaka, the head of the Tirana Chamber of Commerce and Industry says Prime Minister Sali Berisha has assured the business community in a recent meeting government will pay off debts to the private sector through money collected from the privatization of Albpetrol oil firm. Government will collect Euro 850 million from Albpetrol’ sale after signing the contract with the wining consortium. Jaka says penalties must also be applied for delays in disbursement of funds to the private sector for contracted works just like the private is imposed fines for failing to pay taxes in time. Opposition MPs have earlier voiced concern that unpaid bills which are not calculated on the public debt stock, already at the legal ceiling of 60 percent of the GDP, pose a real threat to the economy.
International financial institutions such as the IMF and the World Bank have also expressed concern over government’s unpaid bills to the private sector, suggesting government to use privatization receipts.
“Privatization receipts should be utilized in a balanced manner, to reduce debt and clear unpaid bills. Given the weak state of the economy today, and the recent buildup of unpaid bills and VAT refunds, part of the receipts should also be used to clear the backlog, which will support growth in the near term,” says the IMF.
Non-performing loans mainly in trade, construction and manufacturingبave risen faster than in other countries in the region, largely because of the economic slowdown, government’s nonpayment of suppliers’ bills, and continued delays in collateral execution. Discontinuing the practice of programming optimistic budget revenues and then having to face budget stress once revenue outturn is lower than expected would help avoid the accumulation of unpaid bills, says the IMF in its latest report on Albania. Jane Armitage, World Bank Country Director and Regional Coordinator for Southeast Europe has also recently noted that there is a very obvious and direct link between the failure of the public sector to refund the arrears or pay its bills and health of the private sector “and this in term means that the private sector may not be able to service its loans from the bank and is certainly one part of the explanation for the increase of nonperforming loans that we seeing here.” Non-performing loans rose to 22.3 percent in the third quarter of this year, according to Bank of Albania data.
